Ford Reports 3rd-Quarter Profit Up 62%
Ford Motor Co. on Wednesday said its third-quarter profit rose 62%, beating estimates and setting a record for the period, in a performance analysts say the auto maker may be hard-pressed to repeat amid an onslaught of competition for its popular sport-utility vehicles.
The world’s second-largest auto maker said net income rose to $1.13 billion, or 90 cents a fully diluted share, from $694 million, or 53 cents, before special items in the year-earlier period. Ford was expected to earn 84 cents a share, according to analysts’ estimates.
Ford’s increase was fueled in part by strong U.S. demand for its high-profit Expeditions and Navigators, new full-sized sport-utility vehicles the company can’t produce enough of. But with competitors set to introduce a wave of similar vehicles, Ford’s profit growth could slow considerably, analysts said.
“The third quarter was great for Ford, but one should be skeptical about the sustainability of these results going forward,” said Gary Lapidus, a Sanford C. Bernstein & Co. analyst.
Investors, who have boosted Ford shares more than 50% this year, seemed to share those reservations, as the company’s shares dropped 44 cents to close at $49.13 on the New York Stock Exchange.
Ford said its per-share earnings in the latest quarter were reduced nine cents a share by the costs of closing plants in Lorain, Ohio, and Windsor, Ontario. It didn’t treat these costs as special charges. Also, Ford set aside more money to pay for the depreciated value of vehicles its customers are now leasing.
“They took the opportunity of a good quarter to take some discretionary write-offs, as a hedge against things being a little tougher going forward,” said David Healy, a Burnham Securities analyst.
After a charge for early-retirement costs and a gain from the sale of its USL Capital unit, Ford’s year-earlier net income was $686 million, or 56 cents a share.
Third-quarter revenue rose to $36.1 billion from $34 billion.
Ford’s third-quarter results were boosted by booming sales in Latin America and narrower losses in Europe, where the company has cut costs to cope with a glut of vehicles, a threat now looming in the U.S. light-truck market, analysts say.
During the next several months, Toyota Motor Co., Chrysler Corp. and the Mercedes-Benz unit of Daimler-Benz will all starting selling new sport utilities and pickups in the U.S.
Other than a new near-luxury sedan from Lincoln next year, Ford’s product offerings won’t change much for two years and it likely will remain dependent on trucks for much of its sales growth, said Wes Brown of Nextrend, a California consulting firm.
At a Glance:
American Airlines parent AMR Corp. said it earned $323 million in the third quarter, boosted partly by higher fares and lower commissions for travel agents. AMR said the profit meant per-share income of $3.55 and came on sales of $4.8 billion. A year earlier, AMR earned $282 million, or $3.06 a share, on sales of $4.6 billion. Its results were better than the $3.30 a share expected by analysts.
Caterpillar Inc. said its third-quarter earnings climbed 24% on increased sales, domestically and abroad, of engines, construction, mining and agricultural equipment. The heavy-equipment maker earned $385 million, or $1.03 a share, compared with $310 million, or 81 cents, in the same period last year. The results easily exceeded analysts’ expectations of 92 cents.
NCR Corp. said it will eliminate about 1,000 jobs as it gives its business units responsibility for sales and production to make them clearly responsible for their own profits and losses. The company also reported that its losses narrowed in the third quarter, but mostly because of lower tax and interest costs. The company lost $9 million, or 9 cents a share, compared with a loss of $33 million, or 32 cents, a year ago.
Archer-Daniels-Midland Co. reported that fiscal first-quarter earnings rose sharply over a year ago, when it paid a record $100-million fine to settle a criminal price-fixing investigation. The food-processing company reported a profit of $131.35 million, or 24 cents a share, compared with $3.55 million, or 1 cent, a year ago.
Unisys Corp. said its third-quarter earnings more than tripled to $50.9 million, or 13 cents a share. In the year-earlier period, net income was $14.2 million, or a loss of 9 cents a share, after payment of preferred dividends.
General Dynamics Corp. said third-quarter profit rose 21% because of its acquisition of two Lockheed Martin Corp. businesses. Net income rose to $82 million, or $1.30 a share, from $68 million, or $1.08, a year earlier.
Whirlpool Corp. said third-quarter profit from operations rose to $62 million, or 82 cents a share, from $40 million, or 53 cents, in the year-ago quarter.
Charles Schwab Corp. said third-quarter earnings rose 34% to a record $76.5 million, led by gains in commission and mutual fund service revenue. Net income at the biggest U.S. discount broker rose to 28 cents a share from $57.1 million, or 21 cents, in the same period a year earlier.
Advanta Corp. said third-quarter earnings fell 4.5% as credit card write-offs rose from the previous year. Advanta said third-quarter net income fell to $42.4 million, or 92 cents a share, from $44.4 million, or 98 cents, in the same period last year.
Sysco Corp. said fiscal first-quarter earnings rose 9.1%, more than expected, as the food distribution company did more high-profit business with smaller customers. The food distribution company said net income rose to $80.1 million, or 47 cents a share, from $73.4 million, or 41 cents, in the year-earlier period.
Black & Decker Corp. said third-quarter earnings rose 4.8% to $58.4 million, or 60 cents a share, from $55.7 million, or 58 cents, a year earlier.
Mead Corp. said third-quarter earnings fell 20%, missing estimates, hurt by lower profit from its distribution business. The Dayton, Ohio-based company said net income fell to $50.3 million, or 94 cents a share, from $62.7 million, or $1.18, a year ago.
Corning Inc. posted a third-quarter profit of $112.3 million, or 49 cents a share, contrasted with a loss of $19.8 million, or 9 cents, a year ago.
Perkin-Elmer Corp.’s fiscal first-quarter earnings rose a less-than-expected 8% to $24 million, or 53 cents a share, from $22.2 million, or 50 cents, in the year-ago quarter.
Guidant Corp. said third-quarter earnings rose 14% to $47.1 million, or 33 cents a share, in the quarter, from $41.2 million, or 29 cents, a year ago.
Allergan Inc. reported third-quarter net income, including a gain of $43.6 million, or 66 cents a share, compared with $17.3 million, or 26 cents, a year ago.
California Microwave Inc. reported fiscal first-quarter profit from continuing operations of $2.3 million, or 14 cents per share, compared with $990,000, or 6 cents, a year ago.
DSC Communications Corp. said third-quarter earnings increased 17% to $28.3 million, or 24 cents a share, compared with earnings before charges a year ago of $1.6 million, or 1 cent.
First Union said third-quarter earnings rose 14% to $505 million, or 90 cents per share, from $442 million, or 81 cents, a year ago.
Wachovia reported third-quarter net income of $167.3 million, or $1.03 per share, compared with $164.6 million, or 97 cents, a year ago.
Comerica Inc.’s third-quarter earnings rose 13% to $137 million, or $1.23 a share, from $122 million, or $1.04 cents, in the year-earlier period.
PNC Bank Corp.’s third-quarter earnings rose 12% to $262 million, or 83 cents a share, from $234 million, or 69 cents, a year earlier.
Stanley Works said third-quarter earnings rose 17% before charges, to $49 million, or 55 cents a share, from $42 million, or 48 cents, a year earlier.
Freddie Mac said third-quarter earnings rose 13.5% to net income rose to $354 million, or 49 cents a share, compared with $312 million, or 41 cents, a year ago.
Pacific Gas & Electric Corp. reported third-quarter earnings of $256,500, or 62 cents per share, compared with $225,400, or 55 cents, after one-time charges, a year ago.
LSI Logic Corp. said third-quarter earnings rose 68%, before a charge, to rose to $47 million, or 33 cents a share, from $28 million, or 21 cents, in the year-ago period.
Chips & Technology Inc. reported fiscal first-quarter net income of $2.9 million, or 13 cents, compared with $9.5 million, or 42 cents, a year ago.
* MORE EARNINGS: D2, D6
